Bombay High Court rejects interim plea of World Crest in dispute regarding shares of DishTV

The Bombay High Court recently rejected an interim application filed by World Crest Advisors LLP seeking a restraining order against Yes Bank from transferring, alienating, or creating any third-party rights..Single-judge Justice RI Chagla refused to restrain Catalyst Trusteeship from participating in the management and affairs of DishTV by claiming rights over World Crest’s shares. .World Crest had approached the High Court through a suit seeking an order to declare them as owners of the 440 million shares of DishTV.Yes Bank, a shareholder of DishTV, claimed that those shares had been pledged in favour of Catalyst Trusteeship, a security trustee, by five other companies including World Crest to secure the term loans granted by the bank to them.Word Crest also apprised the court that Yes Bank assigned its assets worth ₹48,000 to JC Flower Assets Reconstruction which also included the DishTV shares..Senior Advocate Navroz Seervai who appeared for World Crest argued that such transfer of shares has resulted in a situation where Yes Bank and JCF were asserting to be shareholders in their own right and not as pledgees.He added that a pledgee has only a special interest in the pledged goods whereas Yes Bank sought to exercise ownership rights. Independent of the illegality of the conduct of Yes Bank and JCF, the pledge is vitiated as fraud and is void ab initio, Seervai argued..Senior Advocate Darius Khambata for Yes Bank and JCF argued that JCF is admittedly the beneficial owner of the suit shares and as per pledge deeds, World Crest authorised Yes Bank to exercise voting rights in respect of the said shares. The voting rights were also conferred by virtue of the independent power of attorneys executed between World Crest and Yes Bank. .Justice Chagla came to a prima facie conclusion that these transfers were permitted by the pledge deeds under which the World Crest has authorised Yes Bank for such transfers.The bench also opined that the pledge deeds by including in its terms the exercise of voting rights of the pledgee, will neither be contrary to law nor lead to conversion nor amount to mortgage of movables. Hence it rejected World Crest’s plea for temporary restraining order..Seervai appeared along with advocates Gulnar Mistry, Manish Desai and Subit Chakrabarti briefed by team from ANB Legal including advocates Shreni Shetty, Khushnumah Banerjee and Antara Kalambi for World Crest. Khambata appeared along with Shyam Kapadia and Ammar Faizullabhoy briefed by a team from Cyril Amarchand Mangaldas including Advocates Indranil Deshmukh, Gathi Prakash, Nidhi Asher, Arushi Poddar for Yes Bank and JCF.Senior Advocate Zal Andhyarujina with advocates Maithili Parikh, Tanya Mehta, Vaibhavi Bhalerao were briefed by DSK Legal for DishTV. [Read Order]